Last Update: 02/22/16
Florida law requires that all real estate brokers and real estate agents not only get licensed by the State of Florida in order to do business here, but that they keep up those licenses with through continuing education.
For example, there have been big changes this year with the new “TRID” rules. These are new federal regulations that became effective on October 3, 2015, and they change the disclosure process and the time frame of disclosures of things like interest rates in residential real estate home loans and mortgages. Florida real estate brokers and the real estate agents are required to know and understand these changes as part of their professional duties.
Why would a real estate broker or real estate agent work without having a current license? Sometimes, they are foreign real estate professionals who may not understand or respect that Florida law applies to them, especially if they are only dealing with a single transaction here in Florida. Why should they worry about being licensed in Florida if the buyer and seller are abroad?
In other situations, these agents may know that they are supposed to have a Florida license but for some reason they are unable to get one. Maybe they have already been suspended. Maybe they are bad apples that just don’t care about our laws or they know they will never be approved by Florida’s regulatory body.
Do You Have To Pay A Commission When The Broker Or Agent Does Not Have A Florida Real Estate License?
When a real estate agent or broker acts without being licensed by the State of Florida, the law allows for these people to be punished, including financial penalties. Under Florida Statute 475.41, commissions are considered invalid if the real estate professional is not properly and currently licensed by the State of Florida:
No contract for a commission or compensation for any act or service enumerated in s. 475.01(3) is valid unless the broker or sales associate has complied with this chapter in regard to issuance and renewal of the license at the time the act or service was performed.
In other words, if it is revealed that the real estate agent or real estate broker in the sale of a Florida home or condo has an invalid real estate license, then they are not able to collect a commission.
The Case of the Swiss Real Estate Broker Who Made the Sales But Didn’t Get Paid
In the case of Revac, S.A. v. Arthur V. Woodward, P.A., 550 So.2d 3 (Fla. 2d DCA 1989), a respected real estate brokerage was denied its commission in a case that it appealed to the Florida appeals court and lost.
The case began one sunny autumn here in Florida, when the owners of a timeshare condominium on Marco Island contacted real estate broker Revac about selling timeshare weeks at the condo resort. Revac at that time — and never in the past or future — had not only NOT registered as a real estate broker in Florida, but had no one working for it as a principal that was licensed as a real estate professional with the State of Florida. Moreover, at no time did Revac bring on board any real estate agents that were licensed by the State of Florida as real estate agents to help sell the property.
The deal was made between the Florida owners and Revac in Switzerland. Revac was a Swiss company. Revac had past success selling timeshare condos in Europe. Revac and the owners signed an agreement where Revac was to get commissions on the sales of 100 timeshare weeks in the Florida condominium. The commission was 20% to be paid by the owner to Revac.
Mr. Woodward was the attorney for the owner. Albert Carasso was the managing director of the real estate brokerage firm Revac. Carasso came to Florida to do the deal. Woodward would use his escrow account to pay Revac its commission at the time of closing on the timeshare deals.
Revac worked to get sales done, and buyers were found – in Europe. Some closings happened. However, Mr. Woodward did not release any money to Revac; instead he turned over what would be commission monies to his client, the owner. So, Revac sued the lawyer for the commission money it did not receive in these sales.
Using Florida Statute 475.41, Mr. Woodward successfully argued that he could not pay the commission to Revac because Florida law prohibited it – the statute invalidates any contract for a real estate commission unless the broker is licensed in Florida – and Revac failed to meet the legal requirements.
As the appeals court explained:
“Chapter 475 is intended “to protect the public from potential economic loss” caused by incompetent or dishonest real estate practitioners…. Especially in transactions involving condominiums and timesharing plans, a special knowledge of Florida law is necessary. … To protect the public from economic loss, it is important for Florida to maintain and develop a good reputation concerning investments in Florida real estate, without regard to the location or nationality of the investors. While Florida can realistically provide protection for persons damaged by licensed real estate brokers, it is difficult to protect persons from unregulated brokers…. Thus, we hold that Revac’s undisputed activities in Florida were sufficient to invoke section 475.41, Florida Statutes (1981), precluding the enforcement of its claim for commission.”
Make Sure Your Real Estate Agent or Broker Is Properly Licensed
Before you contract with a real estate professional in Florida, it’s important to confirm that they are properly and currently licensed to do business in our State. This is especially important to do before you go to closing and pay them a commission. If the agent/broker is not appropriately licensed, no matter how professional they appear or how smooth the transaction has gone, then they are not eligible to receive that commission under our laws. An experienced Florida real estate lawyer can really be helpful if you discover that there’s a problem with the credential’s of the person demanding a commission.
A good piece of advice is to at least talk with a Florida real estate lawyer. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.
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